Saturday, June 11, 2011

Weekly Market Commentary: No Great Change

The dailies look ugly but markets haven't pushed themselves over the edge on a weekly timeframe.

The Nasdaq 100 is the best positioned of the lead indices but it will likely be dragged down by weakness elsewhere. It's the only index trading above 2007 highs. The index is above 2,217 support with a working band in the 2,130 to 2,217 zone. The bull channel cuts through the 2,130 support level at this time, but the 2,217 battle starts now.


The Nasdaq is looking at a support test around 2,600 of its broad channel built off the March 2009 low over the coming weeks. An additional support level can be found at 2,535, although by then the rising channel will be history.


Nasdaq Bullish Percents broke below the most recent swing low, currently sitting just above the 50% level. This suggests the corresponding price swing low from March of this year will follow with a break too.


The Percentage of Nasdaq Stocks above the 50-day MA has collapsed to 22% - which is bounce territory - although a market turn is typically built off a bullish divergence in this indicator. After the next bounce the remainder of the year may be spent trying to find this lower low.


The S&P hasn't yet reached its battle zone. A band of support between 1,219 and 1,236 holds the real challenge for the S&P. Like the other indices it remains inside its bull channel but a channel test isn't far off.


Finally the Russell 2000 is approaching 760 support which will quickly be bisected by channel support. What goes for Small Caps goes elsewhere; should 760 break then look for Tech and Large Caps to follow with breakdowns of their own.


So while the daily time frame will see a bounce soon, it's unlikely to mount to too much.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. I offer a range of stock trading strategies for global markets which can be Previewed for Free with delayed trade signals. You can also view the top-10 best trading strategies for the US, UK, Europe and Rest-of-the-World in the Zignals Trading Strategy Leaderboard. The Leaderboard also supports advanced search capability so you can tailor your strategies to suit your individual requirements.

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